Pioneering in India s Healthcare Revolution

Presentation Structure Our Vision for Indian Healthcare The Apollo Model Concepts for the Future

Vision for Healthcare in India ACCESSIBLE to people from ALL walks of life Largest INDUSTRY & EMPLOYER Leader in quality MEDICAL RESEARCH & TECHNOLOGY Management of Illness & Disease Management of Wellness Management of Access Management Of Technology & Training Management of Brand Global sourcing base for MEDICAL TALENT (eg doctors, nurses, etc) India as the Healthcare Destination for How do we get there?

It all began in a small village called Aragonda in South India

And HE could not save the life of this 38 year old!

Mission Our Mission is to bring healthcare of international standards within the reach of every individual. We are committed to the achievement and maintenance of excellence in education, research and healthcare for the benefit of humanity Dr. Prathap C Reddy Founder Chairman Apollo Hospitals Group - India

20 owned hospitals, 20 associate hospitals, over 50 clinics and 300 pharmacies Over 7200 beds, 14 Cardiac Institutes, 6 Oncology Institutes...

Our Journey till so far 1983 2007 No of hospitals 1 42 Bed strength 150 7200 Employees 450 32000+3000 +!4000 International accreditation None Four hospitals accredited by JCAHO

Integrated Healthcare Group Third Party Administration Clinical Research & Site Management Owned & Managed Hospitals Retail Pharmacies Global Projects Consulting Primary Care Clinics Technology Services & Solutions Health Education & e-learning

Our Journey so far Fully integrated healthcare group Over 42 tertiary and secondary care hospitals totaling over 7,200 beds in India and abroad High end services provider with international standard outcomes Largest private sector employer of healthcare professionals First hospital to be accredited by Joint Commission International (JCI) in India. Over four hospitals accredited in 15 months International partnerships with John Hopkins Medicine, Cleveland Clinic, MD Anderson Cancer Centre, Kings College and others

Creating a Robust Model through Focus on all Stakeholders Customers Employees Doctors / Medical Community Community Financial institutions / shareholders

Medical milestones Over 1.1 million preventive health checks Over 60K cardiac surgeries Over 2,00,000 angiograms, 16,200 angioplasties (PTCA) and 3,500 mitral balloon valvuloplasties. Over 2K renal transplants Over 220 Bone Marrow Transplants (BMT) Pioneered several procedures in Orthopaedics, Neuro Sciences, Cardiology, Gastroenterology, Nephrology and others First successful cord blood transplant for treatment of leukaemia First successful liver transplant in the country

State of the Art Technology PET CT with Cyclotron 64 slice CT scan Third generation operating rooms 4D ultrasound

Education and Training Recognized as a post graduate training center by the National Board of Examinations in India in 16 disciplines Recognized center for training and final examination of Royal college of Radiologists, UK Recognized by the Royal College of Physicians and Surgeons in Edinburgh, UK for training post graduates in surgery and trauma care. 220 interventional cardiologists trained and ~ 20 cardiothoracic surgeons trained 10 Nursing Institutions

Apollo s Generic Metrics Planning stage Operations stage Capital cost per bed Doctor and nurse availability Size of the Catchment area Paying capacity Existing facilities Revenue per bed day Case mix Nurses and doctors ratio Average census OT utilization Clinical outcomes

Growth Potential and Size of the Opportunity Act as Project Filters >5000 cr Acute infections Maternity and Gyneacology Accidents and emergency Cardiology Oncology Other circulatory doseases In- patient market size 500-5000 cr Others Urology <500 cr Digestive diseases Orthopedics <5 % 5 9% >9% Growth %

Financial Performance Revenues on high growth trajectory EBITDA growth and margins 180 160 140 120 100 80 60 40 20 0 Revenues (US $ Mn) CAGR 17% 162 134 113 101 FY03 FY04 FY05 FY06 35 30 25 20 15 10 5 0 EBITDA (US $ Mn) and Margins (%) CAGR 11% 21% 21% 20% 27 29 21 24 18% FY03 FY04 FY05 FY06 Income growth and margins 16 14 12 10 8 6 4 2 0 PAT (US $ Mn) and Margins (%) CAGR 30% 8% 8% 7% 6% 14 11 8 6 FY03 FY04 FY05 FY06 Note: The conversion rate for march2006 is taken@rs.44.3/usd)

International Comparisons Net Margin 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 8% 5.60% Apollo HCA Community Health 4.80% 4.90% Triad 5.50% Universal Health Source: MSN Money and Company reports. Data is for the year ended 31/12/05 for all other hospitals.

Value Creation Model THE APOLLO HOSPITALS GROUP SYSTEMS DRIVEN-DERISKED- HIGH GROWTH Develop Human Capital Market Dynamics And Brand Financial Access Governance Spread risks Operational excellence Clinical efficiencies Volume driven IT

Strategy Map: Finally integrating all concepts Vision To bring health of International standards within the reach Financial Perspective Customer Perspective Innovate Growth Top Line 2X Returns Bottom Line 3X Access Governance Spread Risk Reduce Cost Judicious Growth World Class Care Patient Centric Healthcare Provider of Choice Top of the Mind recall Trust Brand Equity Internal Process Perspective Service Excellence Clinical Excellence Grow Revenues Operations Mgmt COE ACE JCI Brand Mgmt Innovation Service quality excellence Standardized Processes Environment CSR c Great Places to Work Human Capital Perspective Competent team Doctor, Nurses Award winning Doctors Compensation Rewards HR infrastructure Employer Brand SYNERGY

THE APOLLO NETWORK-UNIQUE STRENGTH OWN HOSPITAL INFO CENTRE AND TELEMED JALANDHAR LUDHIANA BATHINDA CHANDIGARH DELHI DEHRADUN Key Learning B Class cities constitute 14% of India s G.D.P. CLINIC PHARMACY JAIPUR AJMER AHMEDABAD SURAT GOA PANVEL PUNE MUMBAI AGRA ALLAHABAD ALIGARH VARANASI LUCKNOW PATNA INDORE NAGPUR BHOPAL RANCHI JABALPUR NASIK BILASPUR KARIMNAGAR VIZAG HYDERABAD KAKINADA RAICHUR KOLKATA CUTTACK BHUBANESHWAR GUWAHATI DHAKA TIRUPATI BANGALORE ARAGONDA MYSORE SALEM CHENNAI ERODE RANIPET Leave no white spaces CHENGANNUR MADURAI SRLANKA

Experience Spanning a Wide Range of Projects Across Diverse Geographies UK Mongolia Jamaica Barbados Ghana Egypt Bangladesh Nigeria Sri Lanka Mauritius Fiji Islands Tunisia Tanzania Sharjah Kuwait Oman Yemen Saudi Arabia Qatar Malaysia

Several challenges to achieving the grand vision Vision Elements Access Wellness Illness Key Challenges Need to address all income segments with wider care options Development of new models Reduce the burden of disease Attack non-communicable diseases (HIV, Heart Disease) Low paying capacity of addressable population High cost of inputs (e.g. medical equip., drugs) Reach (telemedicine & telehealth) Solution Public - Private Technology Professional expertise & training Technology, newer tools, clinical research, telemedicine Partnership Brand Development of clear regulatory frameworks Development of coordinated plan including brand and awareness. Availability of funds to execute it

India s Challenge India s Strength Covering One Billion lives

Indian Population Rural Vs Urban Urban -27 % Rural -73 % So far Primary emphasis has been on Urban for multiple reasons

Rural India - Segmentation RURAL 730 mn Above Poverty line 530 mn Below Poverty Line Organized 360 mn Unorganized 170 mn Organized 130 mn 60% ( 430 mn) Farmers 200 mn Unorganized 70 mn Source: Census India

Urban India- Segmentation Above Poverty Line COVERED Mediclaim CGHS ESIS PSUs State Govt. Defense 100 mn lives URBAN 270 mn Above Poverty Line UNCOVERED Self Employed Employed but not covered 100 mn lives BPL UNCOVERED Auto/Taxi Drivers House mid Casual Labour 70 mn lives Mainly construction Labour Source: Census India

Segmentation not just a marketing Technique Approach toward Universal Coverage should be - Segmental - Multipronged - Unique - Holistic Solutions for one segment necessarily not relevant for others

Product & System innovations must aim at Making Healthcare Accessible & affordable to the common man

Health Information Standards An Example of Public Private Participation Healthcare is an Information Intensive Sector Health Information is Life Health Information has to be Standardised

Standardisation. The Essential First Step An integrated and united step towards simplification and optimisation of Healthcare Technology Government Health Support Sectors STANDARDS An opportunity for all of us to standardise our practices.

Grand Plan Public & Private Sector Should Unite Applications Innovative Healthcare Service Delivery/ Applications TeleMedicine Insurance E-Learning Web Health Building Blocks People Infrastructure IT Foundation STANDARDS to provide Cost Effective Healthcare to Millions

The Health UnITe Environment : Bird s Eye View! Provider s perspective STANDARDS Regulator s perspective Suppliers/ Vendors Information Technology Infrastructure for Health Suppliers/ Vendors LEGAL FRAMEWORK EDUCATION Payer s perspective Consumer s perspective

Health Unite: The Information Technology Infrastructure for Health for India 1. DATA ELEMENTS 2. HEALTH IDENTIFIERS 3. CLINICAL TERMINOLOGY STANDARDS 4. MINIMUM DATA SETS 5. BILLING FORMATS 6. MESSAGING STANDARDS 7. EDUCATION FRAMEWORK 8. LEGAL FRAMEWORK Recommendations Organisations Involved AIIMS: All India Institute of Medical Sciences IMA: Indian Medical Association MCI: Medical Council of India MCIT: Ministry of communication and Information technology DIT: Department of Information Technology MOHFW: Ministry of Health & Family Welfare ICMR: Indian Council of Medical Research NIA: National Insurance Academy GIC: General Insurance Council GIPSA: General Insurers Public Sector Association WHO: World Health Organization AMSS: Amarchand Mangaldas Shroff & Sons IRDA: Insurance Regulatory and Development Authority TAC: Tariff advisory committee ESI: Employee State Insurance Corporation MSH: Management Sciences for Health MCSI: Medical Computer Society of India MCIT: Ministry of Communication & Information Technology ISRO: Indian Space Research Organization SGPGI: Sanjay Gandhi Post Graduate Institute of Medical Sciences WIPRO Project Details: Duration- 8 Months, Working Groups- 8, Workshops-2

Healthcare: The New Way to See It!!! Information Research Information Curative Preventive/ Day Care Information OP Sustenance Information Education Immunization Environment IP Population Information Routine Information Emergency Information

Stop Seeing Healthcare in Isolation Stop Distancing Primary Healthcare Activities View Healthcare as a Whole

Thank You

Navigating the Labyrinth Large public infrastructure Doctor driven clinics No quality standards and no monitoring body Minimal access to funding. Healthcare categorized as small scale industry Brain drain Paying capacity was poor

Growth Drivers for the Industry Opportunity drivers Increase in Population Changing disease demographics Health Insurance Consumerism More no of hospitalizations Increased utilization of equipment Life style diseases i.e., disease with higher cost per episode Increased demand for tertiary care services Potential 300-400 million insurable lives Increased utilization of healthcare services Standardization of care Increased health awareness and spends on health Empowered patient Demand for high quality services Emergence of offshore Emphasis on latest medical services technologies

Commitment to Deliver to Shareholder Business Focus Nature % revenues Cardiology and Cardiothoracic surgery Oncology Neurology and Neurosurgery Orthopedics and Trauma Radiology and Imaging Long term and sustainable Long-term and sustainable Long-term and sustainable Long-term and sustainable Long-term and sustainable 27% 7% 13% 12% 9%

Attracting the Best in Medicine Brand now synonymous with great technology, work atmosphere and systems Exchange programs with best institutions in the World Opportunity to work with renowned surgeons and consultants Pay for performance system Clinical systems and protocols Integrated network

Apollo is always a pioneer Addressing both sides of the equation provider and access infrastructure Integrated healthcare player Technology driven Global Brand Recall Center of excellence model Customer Centric

Apollo the pioneer Disruptive technologies that will change healthcare delivery services forever: Nanotechnology consequent to space research Oncology, Heart breakthroughs Genomics StemCellBanking Tertiary Care treatment at home may become a distinct possibility

Apollo the pioneer Cost pressures to be borne by innovation and productivity Stricter regulatory regime Less privileged to have better access Over bedding esp. in tertiary care in metros a distinct possibility leading to severe competition in the medium term India will emerge as a viable option for Medical Value Travel

Wealth Distribution represents an Reverse Pyramid Top 5% 38% Top 5-10% 15% Top 10-20% Bottom 80% 17% 30% Top 15% constitutes 150 million population. This segments demands the best- in-class healthcare Source: University of Western Ontario, 2006

Apollo the pioneer The future View of the landscape - Competitive as never before - Technology leaps and unpredictable breakthroughs expected - Consumer very discerning and expectations all time high - Doctors and Employees going to be very demanding

Source: The Global Burden of Disease, WHO 1996; McKinsey analysis Disease Pattern moving towards that of Developed Economies 100% =Rs. 25,000 cr 100% = Rs. 74,000 cr CAGR Percent ESTIMATE Acute infections 22 14 5 17 8 Accidents 19 19 13 Cancer 13 Heart diseases Other circulatory Musculoskeletal Genitourinary Digestive Maternity/Gyn Others 14 18 2 2 3 3 3 2 4 3 16 15 7 4 12 10 9 5 Cancer and heart diseases alone will represent almost 30% of the value of inpatient market by 2012 2001 2012 10

Nurturing Medical Professionals Formal education through Nursing Colleges and Technology schools Affiliations with Universities Abroad Continuous Medical Education Exposure to latest Technologies and Procedures Training in Super Specialties Exchange Programs Reverse Brain Drain

Bulk of the Spend is on Primary and Secondary Care Tertiary care, 14% Secondary care 35% Primary care 51% Source: Mc Kinsey and Co, Healthcare in India: The Road Ahead

Hospitalization Growth and Bed Infrastructure Need Gap Hospitalizations 60 50 40 30 20 10 (Units in Millions) 1.50 33 50 2.25 2.5 2.0 1.5 1.0 0.5 Number of Beds 0 2001 2012 0.0 Hospitalizations Number of Beds Source: Healthcare in India : The road ahead - CII & McKinsey

Customer Focus (Contd) Quality consciousness Four hospitals already accredited by Joint Commission International Preventive and wellness programs Mixing the best of the east and the west

Customer Focus Taking healthcare to the neighborhood Tier II cities- a potentially 300 million population Digital backbone E - enablement and IT integration Comprehensive EHIS program under implementation. All Apollo Hospitals to become paperless by 2010 Integration through presence across the entire healthcare space Pharmacies, insurance, clinics, telemedicine, education and others